RIM Talks Up BlackBerry 10 Devices to Wall Street
Things last quarter weren’t quite as bad as expected for BlackBerry maker Research In Motion. But, the company is in for another rough quarter as it enters the ultra-competitive holidays with nothing but its aging crop of BlackBerry 7-based devices.
However, on a conference call with investors and analysts, RIM will be making the case that great things are on the horizon once BlackBerry 10 devices arrive early next year.
The company made a similar case to developers this week at its BlackBerry Jam Americas conference in San Jose, Calif. CEO Thorsten Heins said, “We’re not sleeping much” as the company works to get the software and hardware finalized and through carrier testing.
AllThingsD will have live coverage of the call, which is due to start around 2 pm PT.
While you’re waiting, be sure to watch (or re-watch) RIM executives do their cover of REO Speedwagon’s “Keep On Loving You.”
1:55 pm: RIM shares are surging following the earnings report. They changed hands recently at $8.48, up nearly 19 percent in after-hours trading after gaining 14 cents, or 2 percent, in regular trading ahead of the report.
2:00 pm: Call kicks off right on time.
CEO Thorsten Heins will kick things off with a summary and “strategic update.” We’ll be listening for any update on licensing efforts and job cuts/restructuring.
2:03 pm: Heins takes over following the usual forward-looking statements warning and risk factors.
Heins notes that the company has maintained its subscriber base and cash position.
“We have made steady progress in these areas this quarter,” he said, noting a 2 percent gain in revenue for the quarter as well as the fact it reached the 80 million subscriber threshold.
Cash up $100 million even with restructuring activities.
“RIM continues to be a financially strong company,” Heins said.
The first BlackBerry 10 devices remain on track for a Q1 launch, Heins said.
2:08 pm: Heins talking up BlackBerry 10’s social networking chops, including the coming availability of a Facebook messaging app as well as the ability to post to social networks from within the new operating system’s BlackBerry Hub.
2:09 pm: The on-screen keyboard will also beat the competition, Heins said, by predicting the next word someone wants to type and continuing to learn a user’s typing patterns, both the words they use and how they press the keys.
Carrier testing will start next month, Heins said, reiterating comments he made at BlackBerry Jam Americas earlier this week.
Noting all of the recently launched phones from competitors, Heins said, “These are strong products from great companies.” But he said BlackBerry 10 will enable the next generation of mobile computing.
“Our teams are working night and day to meet the expectations we have of ourselves,” Heins said.
On the restructuring front, Heins said the company is on track to save $1 billion in costs by fiscal 2013.
“We are in the midst of building a leaner and stronger organization,” he said.
2:13 pm: On to the strategic review.
Over the past few months, he met with CEOs about potential partnerships and licensing of BB10 and other BlackBerry productions.
Heins said he will continue to meet with companies, but says he won’t provide any details. “I have not set a specific timeline for the completion of the process.”
2:17 pm: Now CFO Brian Bidulka is going through the financial details of the quarter.
RIM sold 7.4 million smartphones, down from 7.8 million in the prior quarter. Indonesia, Venezuela and South Africa were strong markets.
U.S. was 22 percent of sales, down from 25 percent in the prior quarter. United Kingdom and Canada saw sales tick up, however.
2:20 pm: On the tablet front, RIM said it sold 130,000 Playbook tablets. That’s down from 300,000 in the prior quarter, but Bidulka said the company is working down its inventory of the products and transitioning to more cellular-equipped markets.
Restructuring charges were about $68 million.
2:27 pm: The company reduced its headcount by 2,000 in the quarter, ending with about 14,500 employees at end of quarter. More cuts have happened in the current quarter with the company now having made about half of the 5,000 job cuts it plans as part of the restructuring effort.
The company expects most of the rest of the job cuts to occur by the end of its current fiscal year. Total restructuring charges should be about $300 million.
2:29 pm: Although it expects a loss next quarter, the cash position should remain about the same, Bidulka said.
On to Q & A.
First question: When will BlackBerry 10 hit the low end of the market and will there be new BlackBerry devices on the older operating system to address that market?
Heins: BlackBerry 10 will proliferate into the mid-tier by the fall, and there are concept designs for an entry level product that could come out next year.
2:32 pm: Heins was asked, of the 80 million subscribers, what percentage could realistically upgrade to BlackBerry 10.
“I don’t have the exact quantitative data,” Heins said, but added RIM also believes it can win back customers on other smartphone platforms. He also noted that many people have yet to buy their first smartphone, another segment for BlackBerry 10.
2:35 pm: A rise in sales of the BlackBerry Bold accounted for the company’s higher average selling prices and its better-than-expected sales.
2:36 pm: The BlackBerry 10 launch will be global, Heins said, noting that the company has been working with carriers across the world.
That said, the company intends to support BlackBerry 7 “for quite some time to come,” particularly at the low end.
2:44 pm: Heins said the company knows it needs to appeal not just to businesses but also to the consumers that buy business devices. The BlackBerry screen and browsing experience are among its selling points, Heins said.
2:48 pm: Analyst asking about the recent service outage. Was it similar to one last year?
Heins, as he did earlier this week, called it a “service quality issue” rather than an outage because messages eventually arrived.
(Personally, if I can’t access the service for a time, that’s an outage.)
Heins said it was not at all like last year’s outage, saying the recent issue affected only 6 percent of RIM’s users.
2:53 pm: Readers on Twitter seem to disagree with me, some noting that since it only affected a portion of users it is not an outage. One suggests “disruption” as a better term. I wonder if they’d say the same if it was their email that was totally unavailable.
In any case, I don’t think data has to be lost to count as an outage. That would be a disaster.
2:58 pm: Call wrapping up.